Pending home sales in the U.S. fell 5.5% in December, according to the National Association of Realtors® (NAR). This decline follows four consecutive months of increases. All four major U.S. regions saw month-over-month decreases in contract signings, with the West experiencing the largest drop.
Year-over-year, pending sales also declined in all regions, with the Midwest showing the biggest reduction.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, decreased 5.5% to 74.2 in December. Compared to the same time last year, pending transactions are down 5.0%. The PHSI reached its cyclical low point in July 2024 at 70.2. An index of 100 represents the level of contract activity in 2001.
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“After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” said NAR Chief Economist Lawrence Yun. “Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.”
Regionally, the PHSI fell 8.1% in the Northeast, 4.9% in the Midwest, 2.7% in the South, and 10.3% in the West. Yun noted that the decline was sharper in the Northeast and West, where higher home prices and mortgage rates have significantly impacted affordability.
He also raised the possibility that heavier-than-usual winter precipitation may have affected the timing of purchases.
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